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Last Updated : Jul 23, 2020 10:51 PM IST | Source: PTI

Axis Bank-Max Life deal: Companies agree to changes in certain options

In April, Axis Bank agreed to increase its stake in Max Life Insurance, a subsidiary of Max Financial Services (MFS), to 30 per cent from about 1 per cent.

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Axis Bank and Max Financial Services will make changes to certain options that were agreed upon earlier this year for the lender to hike stake in Max Life Insurance, following a correspondence from regulator Irdai, according to a filing. As per the definitive agreements entered into by the two companies, they had agreed to "certain Value Creation Options and related rights".

In April, Axis Bank agreed to increase its stake in Max Life Insurance, a subsidiary of Max Financial Services (MFS), to 30 per cent from about 1 per cent.

"Based on correspondence from Irdai received by the company, the company and Axis Bank have agreed to make some changes to the Value Creation Options and factor in some alternate mechanisms subject to regulatory approvals and as maybe permitted under applicable law," MFS said in a regulatory filing on Thursday.


Specific details about the changes were not disclosed.

In April, MFS had said the company and Axis Bank intend to create long term value for all shareholders of Max Life by working towards a merger of the company with Max Life.

"Should the merger not be completed by a pre-agreed timeline, the parties have contractually agreed on certain other outcomes which are detailed in the transaction documents including a swap up Axis bank's shareholding to Max Financial, tax consequence of which will be equally borne by the parties," MFS had said in a regulatory filing and also described them as 'Value Creation Options'.

At that time, the company had also said that if the Value Creation Options are not consummated within 63 months from the closing, the transactions provide for a put option for the bank.

The bank would have the put option on the "company to sell all shares held by Axis Bank in Max Life at a price of Rs 294 per share (subject to adjustments mutually agreed between parties) within 9 months of exercise of such put option," the filing had said.

"Customary rights like minority protection rights for Axis Bank at Max Life level, anti dilutive provisions, consequences of identified events of default form a part of the inter-se agreements," it had said.

On the proposed 70:30 joint venture, Axis Bank earlier this week said the definitive agreement to become joint venture partners in Max Life Insurance Company Ltd has been signed.

Since then, the parties have approached regulators for approvals and that the deal continues to be on track, Axis Bank had said.
First Published on Jul 23, 2020 10:50 pm